Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

On May 3, the Ninth Circuit ruled in Tides v. Boeing Co., No. 10-35238, that the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”) do not protect employees who disclose information to the media. Although SOX bars public companies from retaliating against employees who report conduct that they reasonably believe constitutes certain types of fraud or securities violations to Congress, federal regulatory or law enforcement agencies, or a person with supervisory authority over the employee, the Ninth Circuit held that this protection does not extend to employee disclosures to the media. Federal appeals courts have previously ruled on press disclosures under other whistleblower statutes, but the Ninth Circuit’s ruling is the first to analyze such disclosures under SOX.

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On January 4, 2011, President Obama signed the FDA Food Safety Modernization Act (FSMA), which seeks to promote food safety by enacting strict safety standards in the food industry. In addition to the enactment of safety standards, Section 402 of the FSMA ensures sweeping protections for whistleblowers in the industry. The FSMA whistleblower protection applies to any “entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.” The anti-retaliation provisions protect any employee of a covered entity who provides to the employer, the federal government, or the Attorney General of a State information that the employee reasonably believes constitutes a violation of the FSMA; testifies or is about to testify about any such violation; assists or participates in any such proceeding; or objects to or refuses to participate in any activity that the employee reasonably believes is a violation of the FSMA.

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The Washington Times recently published an article by Hunton & Williams attorney Kurt Larkin regarding the impact that the Dodd-Frank Act will have on big labor's ability to infiltrate boardrooms of corporate America. To read the editorial, click here.

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Section 351 of California’s Labor Code prohibits employers from taking any gratuity patrons leave for their employees, and provides that such gratuity is “the sole property of the employee or employees to whom it was paid, given, or left for.”  A number of Courts of Appeal have consistently held that this prohibition does not extend to employer-mandated tip pooling -- where employees must pool and share their tips with other employees.  Louie Hung Kwei Lu, a former card dealer with Hawaiian Gardens Casino, Inc., decided to test these rulings.

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Though the primary focus of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) is the reduction of systemic risk in financial markets and increased regulation of large financial institutions, Dodd-Frank also contains executive compensation, corporate governance and enforcement provisions applicable to most public companies.  Some of these provisions are highlighted below.  For more insights on the full range of business and legal issues associated with current market and regulatory changes, including the Dodd-Frank Act’s executive compensation, corporate governance and enforcement provisions, please visit Hunton & Williams LLP's Financial Industry Resource Center.

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The Dodd-Frank Wall Street Reform and Consumer Protection Act just signed into law by President Obama, H.R. 4173, 111th Cong. (2010) (“Dodd-Frank”), creates new statutory rights and incentives for whistleblowers and also expands already existing rights, such as under the Sarbanes-Oxley Act (“SOX”).  Now more than ever, clear policies and procedures backed by strong audit, compliance and investigatory functions are critical to managing the anticipated increase of regulatory enforcement and private party whistleblower litigation that this expansive legislation likely will create.

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As a recent decision by the U.S. Court of Appeals for the Fourth Circuit makes clear, the fact that an employer prevailed against an employee’s Sarbanes-Oxley claim in an administrative proceeding cannot be used to bar a new trial of the claim in federal court.  The U.S. District Court for the District of Maryland dismissed a former employee’s SOX lawsuit on the ground that it was precluded by an administrative law judge’s granting of the employer’s motion for summary decision.  The Court of Appeals, in a ruling of first impression, held that the lower court erred and vacated its dismissal in Stone v. Instrumentation Lab Co., 4th Cir., No. 08-1970, 12/31/09.

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